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The two most valuable startups in the region have narrowed their differences of opinion, although parts of the deal have yet to be negotiated, said the people, who asked not to be identified because the talks are private. The final details are being worked out among the top leaders in each company with the participation of Masayoshi Son of SoftBank Group Corp, a major investor in Grab, one of the people said.
Under a structure with substantial support, Grab co-founder Anthony Tan would become CEO of the combined entity, while Gojek executives would run the new combined business in Indonesia under the Gojek brand, the people said. The two brands can be run separately for an extended period of time, one of the people said. The combination ultimately aims to become a publicly traded company.
Representatives for Grab, Gojek and SoftBank declined to comment. The conversations are still fluid and may not result in a transaction, the people said. The deal would need regulatory approval and governments may have antitrust concerns about the unification of the region’s two main private transport companies.
Grab and Gojek have been embroiled in a fierce and costly battle for dominance in that business alongside food delivery and mobile payments for the past few years.
Investors have been pushing for them to combine forces across Southeast Asia in order to reduce cash spending and create one of the most powerful Internet companies in the region.
Grab, which is present in eight countries, was last valued at more than $ 14 billion, while Gojek, valued at $ 10 billion, has a presence in Indonesia, Singapore, the Philippines, Thailand and Vietnam.
SoftBank has been pushing for a deal since Son visited Indonesia in January, but is growing increasingly frustrated at the lack of progress. Long-standing rivalry and personality clashes between the leaders of the two companies have led to stalled negotiations in the past, according to one of the people familiar with the talks.
Sea Ltd’s rise as a formidable force in e-commerce and digital payments has injected new momentum into the Grab-Gojek conversation, the people said. The Singapore-based company’s e-wallet, ShopeePay, has been gaining market share at a rapid pace, helped by the growing popularity of Sea’s e-commerce platform, Shopee. That, in turn, challenges market leaders GoPay and Grab-backed Ovo in Indonesia.
Sea’s surprise journey from a competitive startup to the most valuable company in Southeast Asia in the past 10 years has been the “biggest inspiration” for local Internet companies lately, said Rohit Sipahimalani, chief investment strategist at Temasek Holdings.
Sea went public in 2017 after raising more than $ 720 million from investors and now has a market value of close to $ 88 billion.
“People are now seeing that public markets are a viable alternative for Internet companies in Southeast Asia,” said Mr. Sipahimalani, whose firm is an investor in Gojek. “But they also recognize that they need to get to a certain scale, so the IPO (initial public offering) route is becoming more attractive. I think that’s generating a dialogue about mixes and consolidations in the region.”
He declined to comment on the Grab-Gojek deal, adding that Singapore’s state investment firm is not participating in the negotiations.
BLOOMBERG
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